The National Association of Realtors reported today that its index of pending home sales dropped 12.2 percent in July on a month-to-month basis; pending sales activity was off 16.1 percent from year-ago levels. Bloomberg reported that the drop was the worst on a monthly basis since 2001, when the NAR recordkeeping began. From the press statement, NAR economist Lawrence Yun characterized the disruption in the mortgage markets as "temporary:"
Lawrence Yun, NAR senior economist, said abnormal factors are clouding the horizon. “It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment,� he said. “These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat."
If by somewhat he means lots of jobs being cut and lender losses accelerating, I'd agree with Yun on "stabilization." While some liquidity seems to have returned, particularly in the prime jumbo market, there are other markets that simply aren't working right now. The problem here, of course, is that many troubled borrowers will qualify neither for conventional nor FHA financing, something I've brought up in numerous previous posts here at HW.